What is SGX Nifty? Difference Between SGX Nifty and NSE Nifty

1 Apr 2021by Pradeep U

What is SGX Nifty? Difference Between SGX Nifty and NSE Nifty

As an investor in Indian stock markets, you must have come across the term SGX Nifty innumerable times on various platforms like business news channels, social media, and financial websites. Surprisingly many investors including few seasoned ones have no clue about 'What is SGX Nifty?' or its impact on Indian markets.

In this article let’s take a detailed look at:

What is SGX Nifty?

Who can trade in SGX Nifty?

What are the trading hours of SGX Nifty?

What are the differences between SGX Nifty and NSE Nifty?

What is the impact of SGX Nifty on Indian stock markets?

What is SGX Nifty?

SGX is an abbreviation for the Singapore Stock Exchange just like NSE is an abbreviation for the National Stock Exchange.

NSE Nifty or the National Stock Exchange Fifty (Nifty) refers to the stock market index of 50 most actively traded stocks on the National Stock Exchange (NSE) computed using the free-float market capitalization-weighted method.

SGX Nifty is a derivative of the Nifty trade index on the Singapore Stock Exchange.

The last trading day of SGX Nifty is the last Thursday of the expiring contract month. In the event when there is an Indian holiday on the last Thursday of the expiring contract month, the preceding business day is considered as the last trading day.

Who can trade in SGX Nifty?

Investors who are unable to access Indian markets can trade in SGX Nifty.

Can Indian investors trade in SGX Nifty?

Indian citizens cannot trade in SGX Nifty as currently there is a restriction in place which does not permit Indian citizens to trade in derivatives on foreign exchanges.

What are the trading hours of SGX Nifty?

SGX Nifty is open for trade from 6.30 AM to 11.30 PM Indian time. The total duration for which trading can be done on SGX Nifty is 16 hours.

What are the differences between SGX Nifty and NSE Nifty?

SGX Nifty is open for trading for a longer duration from 6.30 AM to 11.30 PM Indian time whereas NSE Nifty is open for trading for a shorter duration i.e., from 9.15 AM to 3.30 PM.

The contract size of SGX Nifty is very different in comparison with NSE Nifty. In NSE Nifty there are 75 shares in every lot. On the other hand, the SGX Nifty does not have a contract with shares in it. Instead, it is expressed in terms of USD. For example, if the SGX Nifty is trading at 8000, then its contract size would be 16000 USD (8000 x 2 USD).

In a situation where the NSE Nifty goes up by 50 points, then the investor’s profit for 1 lot of Nifty would be Rs. 3750 (50 x 75). On the other hand, if SGX Nifty goes up by 50 points the investor’s profit would be 100 USD (50 x 2) per contract.

The settlement in SGX Nifty is done on a cash settlement basis, where the final settlement price is the official closing price of the S&P CNX Nifty Index, adjusted to the nearest two decimal places.

The official price is calculated on the weighted average prices of the individual component stocks of the index during the last 30 minutes of trading.

What is the impact of SGX Nifty on Indian stock markets?

Many traders and market experts are of the view that as the SGX Nifty opens well before the NSE Nifty, it gives an idea about the direction of the Indian market or how the Indian markets are going to perform while opening. It also gives a clue whether the NSE Nifty will open up with positive or negative points.

However, this cannot be considered 100% accurate at all times as economic factors vary in both countries.  There are multiple factors affecting the markets and all factors relevant to Singapore may not be relevant to India or vice-versa.

Concluding thoughts

In this article, we took a detailed look at what is SGX Nifty, the difference between SGX Nifty and NSE Nifty, and the impact of SGX Nifty on Indian stock markets. SGX Nifty offers an alternative platform for those investors who are unable to access Indian markets for trades.

To a large extent, the direction of the SGX Nifty offers an insight to the Indian investors about the direction of the Indian market while opening. If the SGX Nifty is positive then the Indian markets may also open on a higher note. On the other hand, if the SGX Nifty is negative, Indian markets may also open in negative. Depending on the direction of the SGX Nifty, traders can decide whether to enter into long or short positions accordingly.

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